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Smokers, tobacco
both winners in early Engle cases
REUTERS
August 20, 2009
By Jim Loney - Analysis
MIAMI (Reuters) - Fifteen years after a Miami Beach
pediatrician suffering lung disease took on the tobacco
giants, thousands of smokers' lawsuits are working their
way through Florida courts and early results encourage
both sides.
There have been nine verdicts in a massive
block of litigation known in the industry as "Engle
progeny," the offspring of a landmark 1994 lawsuit
filed by Dr. Howard Engle that produced a $145 billion
judgment against cigarette makers six years later.
It was the first class-action brought
by sick smokers to make it to trial and the largest
civil damage award in U.S. history. The judgment was
overturned on appeal, but the multimillion dollar litigation
industry spawned by that lawsuit could thrive for years
in Florida.
The scorecard: seven judgments for smokers
and their families, ranging from $600,000 to $30 million;
two wins for tobacco firms.
"I think we've seen that these cases
are winnable," lawyer Jonathan Gdanski said after
winning a $1.9 million judgment last week in Broward
County.
The lawsuit by Engle, who died in July
at age 89, was filed on behalf of as many as 700,000
Florida smokers and generated more than 7,000 individual
lawsuits, many filed by the relatives of dead smokers.
Philip Morris, a unit of Altria, faces about 3,300;
Reynolds American's RJ Reynolds Tobacco Company some
3,500.
The largest judgment returned to date
was $30 million in compensatory and punitive damages
levied in June by a jury in Pensacola for Hilda Martin,
the widow of a longtime smoker. But some of the judgments
would require cigarette makers to pay less than $1 million
and all of them will be appealed.
Despite losing seven of nine, cigarette
makers can take comfort from some early trends. Only
two resulted in punitive damages -- imposed to rap companies
for bad behavior -- and in several, the juries rejected
them as inappropriate.
SMOKERS PARTLY TO BLAME
In the Pensacola verdict, punitive damages
accounted for $25 million of the $30 million judgment.
Some juries are putting the onus for smoking
on smokers.
In two Fort Lauderdale trials, the smoker
was found 50 percent liable, cutting in half the amount
a tobacco company might ultimately have to pay. In a
case decided on Wednesday in Escambia County, the smoker
was found 57 percent liable.
"Even in cases with plaintiffs' verdicts,
juries have held the plaintiffs liable for most of the
damages and responsible for their choices," Altria
spokesman Jack Marshall said.
But Gdanski sees that in a different light.
In his case, he said, he drew a stark line between the
smoker and the tobacco company by telling jurors that
Shirley Barbanell, late wife of his 92-year-old client,
Leon Barbanell, was partly to blame.
"The tobacco company denied everything.
They denied that she was addicted, they denied that
she had lung cancer and they denied that she died of
lung cancer," he said. "The jury found for
us on all of those points."
Edward Sweda, senior attorney at the anti-smoking
Tobacco Products Liability Project, said it was a good
sign that juries were willing to hold cigarette makers
accountable.
"The companies have major trial strategies
to blame smokers for smoking, to blame their former
customer for doing exactly what they, the companies,
wanted them to do, which was to keep buying cigarettes
and smoke them and buy some more," he said.
The early results hardly represent a financial
hardship for the tobacco firms compared to the shock
value of the ruling in 2000, a $145 billion award that
hung over the industry for years before it was thrown
out in 2003 by an appeals court.
R.J. Reynolds and Philip Morris have both
vowed to appeal adverse rulings and vigorously defend
the remaining cases.
KEY APPEAL IN SEPTEMBER
Lawyers are scheduled on September 17
to make arguments before the 11th U.S. Circuit Court
of Appeals in Atlanta on an important facet of the Engle
litigation.
When the Florida Supreme Court rejected
the $145 billion award in 2006, it left intact some
critical findings of the trial court -- that smoking
causes diseases, that nicotine is addictive, that cigarettes
are defective and dangerous and that tobacco companies
concealed the health effects of smoking.
The ruling was supposed to let smokers
try their individual cases without having to prove those
elements again, making it easier and cheaper for them
to take on costly court battles.
A court in Jacksonville rejected the use
of those findings, putting thousands of federal lawsuits
on hold. An adverse ruling for smokers, while not binding
on state courts, could have a chilling effect on those
cases, lawyers say.
With thousands of lawsuits pending, Engle
could shadow tobacco companies for years. But if the
first results are an indication, the lawsuits are unlikely
to impede profitability.
"From what we've seen so far in judgments,
the damages that have been awarded are fairly manageable
from a cash-flow perspective," Morningstar analyst
Philip Gorham said. "So from an investor's point
of view, these cases are road bumps rather than a life-threatening
financial penalty."
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